Telescene tilting; Painter steps down

Rapid-growth producer in cash-flow quandary

MONTREAL — Canuck TV producer Telescene Film Group, which has been expanding rapidly over the past couple of years, has run into some big-time financing problems.

The Montreal-based company announced a $100 million production slate earlier this year, but execs now admit that many of the shows on the slate do not have stable financing.

Executive vice president Paul Painter will step down from his executive position on Tuesday, the day of the company’s annual meeting, which promises to be stormy. The company says Painter is leaving “to pursue other business opportunities,” but most analysts say the departure is clearly tied to the financial crisis. Painter retains a position on the board of directors and, with Telescene president Robin Spry, still controls more than half the voting shares in the company.

Telescene has tapped veteran Wall Street manager Errol Glasser to try to grapple with the company’s financial problems, and he has joined the board to advise the company on an interim basis and to help find a replacement for Painter. Glasser was a managing director of investment banking at Kidder Peabody & Co. and has held exec positions at Revlon and the Trump Group.

Telescene has completed the $23 million financing necessary to complete the 22-episode series “Sir Arthur Conan Doyle’s The Lost World,” which is distributed by New Line Television in the U.S., but the company has yet to finalize financing arrangements for many of its other projects, including the made-for-MTV series “Live Through This” (currently shooting in Montreal), “Big Wolf on Campus” and the action series “Matthew Blackheart: Monster Smasher,” which was originally set to shoot this summer but has now been delayed until at least early next year.

Grew very fast

“The short-term goal is to get the financing stabilized for the company,” said Glasser. “We’re taking each series one at a time. The company has grown up quickly from very small beginnings, and it goes back to the way the shows were financed. Your financing strategy has to change as the company grows and develops.”

Most analysts say the company has over-extended itself financially and has run into cash-flow problems.

Glasser said no show has been canceled yet, but he wouldn’t rule out the possibility. There are also reports that Telescene is in the market for a buyer. TVA Group looked seriously at acquiring Telescene last year but eventually took a pass and instead bought Montreal production company Motion Intl. (now TVA Intl.).

Stock shock

Telescenes shares, which trade on the Toronto Stock Exchange, have also taken a hammering over the past few months.

They were trading as high as C$22.75 ($15.27) last fall and had dropped to 67¢ on Friday.

On July 31, the company announced disappointing first-quarter results. The company reported a net loss of $128,000 for the quarter, compared with net earnings a year earlier of $651,000.

Revenue was down for the quarter ended May 31 to $2.8 million, compared with $7.3 million in the same quarter the previous year.